Ranking Member Waters’ Opening Statement at Hearing on the Federal Housing Finance Agency
Congresswoman Maxine Waters, Ranking Member of the House Financial Services Committee, today made the following opening statement at the full committee hearing on the Federal Housing Finance Agency (FHFA). The FHFA is conservator of the Government Sponsored Enterprises, Fannie Mae and Freddie Mac. Edward DeMarco, Acting Director of the FHFA, will appear before the committee as a witness today.
Thank you, Mr. Chairman for holding this hearing this morning on oversight of the Federal Housing Finance Agency (FHFA).
We are at a pivotal moment in our housing recovery, having staunched the bleeding caused by the 2008 financial crisis. After large declines in home prices in 2007 through 2011, prices in many markets bottomed out in early 2012, and are now starting to rise. Housing construction is likewise increasing, and a record 1.1 million households were able to refinance under HARP in the last year. Freddie Mac posted $11 billion in income in 2012, and Fannie Mae expects to report “significant net income” when they file their annual report.
But headwinds remain in the market, with many homeowners still struggling to negotiate loan modifications, refinance their mortgages, and understand the terms of the many mortgage settlements that have been negotiated. Principal reduction modifications also, unfortunately, remain rare. And the private sector continues to be largely unwilling to offer mortgage credit, even to qualified borrowers, due to investor skittishness over lingering problems in the private securitization market.
Acting Director DeMarco, who is here to testify before us today, finds himself at the center of this tremendously complex and important market as the conservator of Fannie Mae and Freddie Mac. I appreciate that this is a tough job, and that it is not easy serving in an “acting” capacity for nearly four years.
But with that said, I am concerned that Mr. DeMarco has used his wide latitude in regulating Fannie Mae and Freddie Mac to make a number of controversial decisions during his tenure, including refusing to move forward with principal reduction modifications, even when they would benefit the taxpayer, and raising fees in states with strong consumer protection laws.
While I have agreed with some of Mr. DeMarco’s decisions, I am concerned about this lack of accountability, particularly since many of the choices being made will impact the future of the secondary mortgage market.
I have been urging my colleagues to begin the work of reforming the GSEs, because without action from this Committee, Acting Director DeMarco will continue to take it upon himself to do the work of reshaping Fannie Mae and Freddie Mac outside of public scrutiny, and without the input of the Congress of the United States.
This Committee should begin the job of considering the many bipartisan reform proposals on the table, so that we can give the market certainty, guarantee the continued availability of the stable mortgage products like the 30-year, fixed-rate loan, and ensure that institutions of all sizes – including community banks and credit unions – are able to participate in the secondary mortgage market.
Moreover, I implore my colleagues in the Senate to support the next nominee selected by the President to head the FHFA.
Finally, as we consider the testimony today, let us remember that the issues we are discussing reach beyond specific policies regarding the GSEs. Our purpose is not only to put the GSE's on solid footing, but to create the conditions that will help bring our economy back to full strength. Mr. Chairman, I hope that this is the priority of the Committee going forward, and I yield back the balance of my time.